Contractor Recovers on Differing Site Condition Claim

Kegler Brown Construction NewsletterNovember 1, 2000by Don Gregory

Many architects and engineers preparing contract documents for owners are fond of including provisions imposing a duty on bidders to closely examine the site and attempting to disclaim any liability for the subsurface information provided to bidders such as soils borings and reports. Contractors believe that it is impractical to conduct a subsurface investigation pre-bid or to include a contingency for this unknown risk in the bid, particularly when the contract contains a differing site condition clause (promising to pay extra if a materially different and unanticipated condition is encountered).

The Court of Appeals for the Tenth District recently ruled that a contractor's failure to perform a pre-bid inspection did not preclude a recovery for a differing site condition on a subsurface condition that could not be revealed on a site visit. Sherman R. Smoot v. State, No. 98AP-1497, 2000 Ohio App. LEXIS 180, 2000 WL 64310 (Ohio App. 10th Dist. Jan. 27, 2000). In finding the disclaimed soils report subject to the Spearin warranty (the owner impliedly warrants the sufficiency of the plans and specs), the Court observed:

"where the information provided by the government was obviously intended to be used by bidding contractors in formulating their bids, the implied warranty of job site conditions will prevail over express contract clauses which disclaim any responsibility for the accuracy of information provided to contractors, and which require contractors to examine the site and check the plans."

The Court ruled that the Spearin doctrine (owner's implied warranty of design) applies even if the soils report was not a part of the contract documents and "for information only."

This case follows the prevailing trend that disclaimers are ineffective if the contract contains the usual differing site condition clause and the contractor encounters unanticipated site conditions.